BYD, Tesla to Cut Prices by Year-End

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The automotive landscape in China is undergoing a transformative phase, particularly with the advent of the Spring Festival seasonOn December 27, both BYD and Tesla, leaders in the electric vehicle sector, rolled out enticing promotional campaigns aiming to capture the pre-festival sales rushThis strategic move is not just about moving units; it's about seizing market share in a highly competitive environment.

On this significant date, BYD unveiled an aggressive pricing strategy for two of its flagship models: the second-generation Song Pro DM-i and the Qin PLUS EV Glory EditionBoth vehicles, known for their popularity among consumers, now feature eye-catching price reductions, starting at an appealing 99,800 RMBThe price cut for the Song Pro DM-i, which had only recently hit the market in September, was particularly noteworthy, seeing a substantial decrease of 13,000 RMB

This bold gesture reflects BYD's commitment to expanding its market footprintThe Qin PLUS EV Glory Edition, not to be outdone, offers a 10,000 RMB discount as wellFurthermore, these models come with generous trade-in subsidies, reaching up to 24,000 RMB and 25,000 RMB respectively, providing tangible financial relief for consumers contemplating a vehicle exchangeThe incentives don’t stop there; buyers also benefit from zero down payment financing options and complimentary OTA upgrades, which enhance the vehicle ownership experienceAdding to the array of offers, the Song L DM-i joined the fray with an insurance discount of as much as 5,000 RMB, making the purchase even more appealing for potential buyers.

Calculating the discounts, the price reductions for the Song Pro DM-i and Qin PLUS EV Glory Edition come to approximately 11.5% and 9.1% respectively, while the Song L DM-i offers a reduction of up to 3.7%. This pricing strategy is not merely an act of benevolence; it is a calculated maneuver amidst a dynamic marketplace.

Industry experts opine that BYD's aggressive pricing decision is twofold: on one hand, it seeks to harness the consumer enthusiasm that typically surges before the Spring Festival, and on the other, it aims to stabilize January sales figures

With the anticipated expiration of the "Double New" subsidy policy by the end of this year, there exists a potential gap in incentives that could impact early 2024 sales, making these offers timely.

Interestingly, Tesla initiated its promotional strategy slightly earlier, launching a “purchase existing stock, pay less on the final payment” policy on December 24. Purchasers of the Model Y can enjoy a reduction of 10,000 RMB on the final payment, with the additional benefit of a five-year interest-free financing option available until the end of JanuaryThis initiative follows Tesla China’s earlier announcement of a similar promotion running from November 25 to December 31, reflecting the company’s responsiveness to market conditions.

Throughout 2023, BYD has emerged as a trailblazer in the automotive "price war" narrativeWith the bold assertion that electric vehicles could be more affordable than gasoline options, the company has rolled out a string of limited-time offers and competitively priced vehicle launches

Having shattered the half-million unit sales mark in both October and November, BYD's cumulative sales for January through November reached an impressive 3.757 million units, marking a year-on-year growth of over 40%. The head of BYD’s automotive engineering research institute, Lian Yubo, revealed that the company anticipates total sales could hit 4.25 million in 2024, a testament to its aggressive market strategy.

Tesla, meanwhile, has also been making wavesWith a recent sales figure of 21,900 vehicles in the first week of December (a record for Q4), it solidified its position as the second-largest player in China’s electric vehicle market, with total sales showing an 8.77% year-on-year increase to 574,200 units from January to November.

With both BYD and Tesla leading the charge, the Chinese automotive market is on the brink of a new wave of competitive pricing, particularly with the approach of the Spring Festival, which this year arrives earlier than usual

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The timing presents unique challenges and opportunities for both consumers and manufacturers.

As noted by Cui Dongshu, Secretary-General of the China Passenger Car Association, consumer behavior largely revolves around purchasing decisions leading up to the Lunar New YearThe timing of the festival can dramatically influence sales trends, especially in JanuaryWith the 2025 Spring Festival falling on January 28—13 days earlier than in 2024—this shift, combined with possible maintenance schedules across sectors such as businesses, tax services, and vehicle management offices, could prompt some consumers to finalize their purchases by the end of 2024.

As expert Li Yanwei points out, there are two emerging implications for the market: first, consumers might front-load their spending this year, which could lead to lower new vehicle order volumes in January; second, the brief sales window during the Spring Festival may hinder sales in both January and February for new vehicle launches

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